Investor · Los Angeles, CA · Member since 2017 · 43 posts · 9 votes
I just got turned onto raw land investing and am considering purchasing a program with either @Mark Podolsky or @Seth Williams, but I'm wondering about one thing. Although there might be a seemingly unlimited amount of raw land for purchase, there is a finite number of good deals, for example, on tax delinquent parcels. If there are already a bunch of hungry raw land investors using Podolsky and Williams strategies for finding good deals, won't those deals be going, going, gone soon enough? After all, there are only just over 3,000 counties in US, and I'm sure the raw land guys are scrubbing the data bases for those good deals. Thoughts?
Investor · Willow Spring, NC · Member since 2009 · 5k+ posts · 3k+ votes
9y
What do you do in "raw land investing"? I own and/or control several hundred acres of 'raw land' but don't consider it 'raw land investing', mostly because I have some kind of a 'play' on it. Is this a flipping method or something else?
Investor · Scottsdale, AZ · Member since 2008 · 281 posts · 113 votes
9y
I think this question is brilliant and too many investors don't think through market size until it's too late...
So, the first variable is size of market. The second variable is players in the market and the third variable will be how much capital you need to deploy to get a ROI on your time and money.
So let's break it down... There are 3007 counties. There are over a billion land parcels. The first variable is we have a massive market of available land to acquire.
The second variable is competition. If you go to a local REIA meeting and there are 100 people at that meeting, 99 of them will be house flippers or wholesalers. You would most likely be the only land investor in that room
So essentially there is virtually no competition especially when you look at the market size.
The third variable is how much capital you have to deploy. So, if you can acquire .001% of the market that is a million parcels per year which would be logistically impossible for an investor to buy and sell in one year. This is why private equity groups and hedge funds literally avoid this market and spend their large amounts of capital in tax liens or larger commercial projects.
As a result, based on these 3 variables I would argue you would literally run out of money before you run out of deal flow.
Last year I closed 192 deals and that was working 2 hours per week in the business.
My advice is to start making offers and if in the first year you don't buy at least 1% of the deals that come across your desk you can post here that the market is now saturated. However, since 2001, my business has increased each year except for 2010-2011 even though one would think the market would be more competitive as the land investing niche grows in popularity.
Investor · Willow Spring, NC · Member since 2009 · 5k+ posts · 3k+ votes
9y
Your post didn't answer my question.
In NC and SC, the brokers routinely get 10% commission on land sales. Seems like you are pounding the pavement to get listings? Is that what this is?
Most of the parcels I buy have been around (on the market and off the market) for sometimes years. There is usually something wrong with them in their current use. It takes some effort, and sometimes dealing with zoning/permits, but when I buy I'm generally changing use that creates a new/better valuation. Is that what this is?
Or is this a flipping method where you anticipate you'll find a better $ from another buyer?
Not that there is anything wrong or right with any of the above.. but it seems that you aren't walking the parcel or doing a timber cruise or talking to planning/zoning or talking to neighbors. If that's the case, it's more like land speculating, IMO.